It’s tempting to just hold cash when there’s market volatility rather than buying ASX shares.

That’s certainly been on my mind in 2020 as we saw the S&P/ASX 200 Index (ASX: XJO) quickly turn from record high into a bear market.

So, should we all really be holding cash and waiting for the market to fall further?

Time to buy ASX shares or hold more cash?

Let’s start with the good things about holding cash.

For one, it’s safer. Cash is about as safe an investment as they come which can be good if you’re nervous about the share market.

Another benefit of cash is that it provides a buffer while times are tough. Many Aussies are facing the prospect of low or no wages in the short-term which means cash may be king right now.

There’s also the chance to stockpile cash and buy ASX shares cheaply. Most of the big market crashes in recent years have taken 12-18 months to actually reach rock bottom.

Despite falling lower in February and March, the ASX 200 has rebounded strongly. This could mean there are further falls to come as economic data and corporate earnings deteriorate.

However, holding cash isn’t necessarily the ‘safe bet’ you might think.

Firstly, there’s the opportunity cost. If you sit on the sidelines, you might miss out on potential gains.

That’s been obvious from the recent ASX share market rebound. If you sold your holdings in mid-March, you might have had to buy back in at a higher price rather than just riding the wave.

Secondly, there’s plenty going on to support the share market right now. This includes the central banks lowering interest rates as well as continued government stimulus packages pumping money into the economy.

If ASX shares don’t crash as you expect, you could miss out on potential gains. Even if they do crash, you might still have been better off buying and holding for the long-term.

Foolish takeaway

It’s easy to become spooked and consider holding more cash when ASX share prices are volatile .

While cash isn’t itself a bad thing and can be good to have a safety buffer, it may not be wise to go all-in.

It’s important to remember your long-term time horizon and not panic-sell at the first sign of ASX share price falls.

If you’re really that worried about your short-term gains or losses, maybe you’re not ready to invest in shares.

Another option could be to hold defensive healthcare or energy shares, such as CSL Limited (ASX: CSL) or AGL Energy Limited (ASX: AGL), to ease some of of your nerves.

More reading

• Is 2020 a good time to get a credit card?
• Are Macquarie Group shares worth investing part of $3,000 into this June?
• What the 10 largest companies in the world have in common
• Why is it so hard to outperform the ASX 200 index?
• ASX 200 closes higher, banks keep rising

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Do you have $3,000 to invest in shares this month? Below I’ll share my top three picks in BetaShares NASDAQ 100 ETF (ASX: NDQ), CSL Limited (ASX: CSL) and Macquarie Group Ltd (ASX: MQG) shares to either add to or help you start your share portfolio.

I believe that shares are a much better alternative to keeping your money in a savings account or term deposit. The interest earned there often doesn’t even cover inflation.

BetaShares NASDAQ shares

The NASDAQ 100 ETF is comprised of the 100 largest, non-financial businesses on the US NASDAQ exchange.

Australia’s tech sector is tiny compared to the US market. So, purchasing this exchange-traded fund (ETF) gives you instant diversification to a much larger tech market.

It is home to some of the world’s most successful businesses with a high proportion being larger companies. This includes tech giants Amazon, Facebook, Microsoft, Google, Netflix and Apple.

Many of these companies are world-leading brands, have strong positions in market niches and strong cash flow. 

A significant proportion has also seen share price growth over the past 5 years well above a 10% average per annum. I believe that many will continue to grow strongly over the next decade. This, I feel, is likely to lead to above-average returns for this ETF, well into the next decade.

CSL shares

CSL has become a global market leader in blood plasma research and disease treatment. It now reaches more than 60 countries.

Its strong growth over the past few years has been driven by high investment in research and development to create new products.

CSL has invested significantly in research and development over the last 5 years. This creates a pipeline of new products. In FY19 alone it invested $832 million.

I believe that CSL is well-positioned to deliver strong earnings growth over the next 5 to 10 years. This I feel, is likely to lead to continued strong share price growth.

Macquarie Group shares

Macquarie is a global financial services giant, headquartered in Australia, with a core focus on international investment banking.

I think it is a good option if you want to gain some exposure to the financial services sector. I also believe that it is a better option than our 4 big banks.

Its business model has evolved significantly over the last decade. Macquarie has now become a more balanced and diversified business. Whereas, in the past, it was too heavily focused on a small product set. For this reason, it got into trouble during the global financial crisis.

Macquarie also currently pays an attractive trailing annual dividend yield of 3.6%.

More reading

• What the 10 largest companies in the world have in common
• Why is it so hard to outperform the ASX 200 index?
• CSL share price lower despite COVID-19 vaccine news
• Brokers name 3 ASX shares to buy today
• 2 ASX growth shares I’d buy before Afterpay shares

Phil Harpur owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS and Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Are Macquarie Group shares worth investing part of $3,000 into this June? appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) was on form again last week and recorded a very strong gain. The benchmark index climbed 4.2% over the five days to end at 5998.69 points.

While most shares on the index pushed higher, some climbed more than most. Here’s why these were the best performers on the ASX 200 over the period:

The Pilbara Minerals Ltd (ASX: PLS) share price was the best performer on the ASX 200 last week with a massive 36.5% gain. This was despite Chinese lithium prices falling to their lowest levels of the year last week amid lacklustre demand for the battery making ingredient. Pilbara Minerals is one of the most shorted shares on the ASX with short interest of 9.25%. I suspect some of its gains could have been down to short sellers buying shares to close their positions.

The Unibail-Rodamco-Westfield (ASX: URW) share price was on form for once and surged 28% higher last week. This appears to have been driven by optimism over the reopening of economies and bargain hunters taking advantage of a recent collapse in the shopping centre operator’s share price. Even after last week’s gain, Unibail-Rodamco-Westfield’s shares are down 55% from their 52-week high.

The Adbri Ltd (ASX: ABC) share price was a strong performer last week with a 27.6% gain. The catalyst for this strong gain was the government announcing a $688 million HomeBuilder program to support the construction industry. This program will see Australians offered $25,000 grants to build a new home or start a major renovation. Adbri, previously known as Adelaide Brighton, looks well-placed to benefit as a building materials provider.

The Perenti Global Ltd (ASX: PRN) share price wasn’t far behind with a 23.5% gain last week. This was despite there being no news out of the mining services company. These latest gains mean that Perenti, formerly known as Ausdrill, has seen its shares rally 225% higher since dropping to a 52-week low in late March.

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price caught the eye last week with a 19% gain. Investors were piling into banking shares again on the belief that the sector’s outlook was not as bad as first feared. The big four banks were also strong performers and played a key role in driving the ASX 200 higher.

More reading

• ASX 200 hits 6,000 points: Westpac provide AUSTRAC update, Vocus reaffirms guidance
• This embattled ASX 200 company could be the next M&A target
• These ASX shares are set to get a big boost from the next big government stimulus
• ASX 200 up 0.6%: NAB charges higher, ACCC investigates Qantas acquisition
• 3 ASX 200 shares to watch this week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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